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IRS Seeks Comments on New Requirements for Tax-Exempt Hospitals

May 28, 2010

On May 27, 2010, the IRS issued Notice 2010-39, to solicit comments regarding the four new requirements imposed on charitable hospitals to maintain their tax-exempt status, adopted as part of the Patient Protection and Affordable Care Act. The four requirements are set forth in new Section 501(r) of the Internal Revenue Code (the “Code”) and are described in greater detail in our May 3rd Tax Alert. The IRS and the Department of the Treasury seek comments related to the new requirements, which generally include: (i) conducting triennial community health needs assessments (CHNA); (ii) establishing a qualified financial assistance policy; (iii) limiting certain charges for emergency and medically necessary care provided to individuals who are eligible for assistance under the qualified financial assistance policy; and (iv) abstaining from engaging in certain extraordinary billing and collections activities. Generally, the IRS and Department of the Treasury seek comments related to: (i) the appropriate requirements for a CHNA; (ii) what constitutes “reasonable efforts” when determining a person’s eligibility for assistance under a financial assistance policy for purposes of the billing and collections requirement; and (iii) the requirement in Code Section 501(r)(2)(B)(ii) that a hospital facility should not be treated as tax-exempt pursuant to Code Section 501(c)(3) if it does not individually satisfy the new exemption requirements, even if it is owned by an organization that operates more than one hospital facility and the other hospital facilities satisfy the new requirements.

All comments should refer to Notice 2010-39 and should be submitted by July 22, 2010. Comments can be submitted electronically to or by mail to:

Internal Revenue Service
CC:PA:LPD:PR (Notice 2010-39)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

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